This has come up a few times recently... It's not covered in the rules but I do remember Sami altered it after the rule was put in place (but I cannot find the post in question).
As I understand it, you will not receive a warning message if the flight is once daily (or less), even if supplying more than 200%. This was disabled to allow players to serve very thin routes with aircraft that they already have in their fleet and may not be perfectly suited to the route.
But remember, as frequency is the crucial factor to winning market share - operating an 100 seat aircraft once per day on a route with demand of only 30 pax will not disadvantage another player operating a 30 seat aircraft on the same route with the same frequency. The effect will be the same if they operate a 30 seat aircraft, a 100 seat aircraft or a 200 seat aircraft (assuming that CI and RI are similar). This is why Sami disabled the warning message in these cases.
So, on a route with 30 pax per demand, you can have a single 100 seat flight but not two 50 seat flights.
I use F27's (48 seats) on a few very low demand routes (20 pax per day) and without any competition they are profitable. If someone else started the routes too, I doubt either of us would make any money at all so a bit of common sense needs to be applied.